Question

On January 8, the end of the first weekly pay period of the year, Regis Company’s payroll register showed that its employees earned $22,760 of office salaries and $65,840 of sales salaries. Withholdings from the employees’ salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $12,860 of federal income taxes, $1,340 of medical insurance deductions, and $840 of union dues. No employee earned more than $7,000 in this first period.
1. Calculate below the amounts for each of these four taxes of Regis Company. Regis’s merit rating reduces its state unemployment tax rate to 4% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.6%. (Round your answers to 2 decimal places.)


2. Prepare the journal entry to record Regis Company’s January 8 (employee) payroll expenses and liabilities. (Round your answers to 2 decimal places.)


3. Prepare the journal entry to record Regis

Answer 1

Answer:

1)

$\left[\begin{array}{cccccc} department& salaries&OASDI&HI&SUTA&FUTA\\ office&22,760&1,411.12&341.4&280&42\\ sales&65,840&4,082.08&987.6&280&42\\\end{array}\right]$

2) payroll expense entries:

payroll expense 2063.14

     Medicare payable       330.02

     Social Security  payable      1411.12

     SUTA                      280

     FUTA                        42

--------------------------------------------

payroll expense  5358.76

     Medicare payable         954.68

     Social Security  payable      4082.08

     SUTA                       280

     FUTA                         42

Explanation:

$\left[\begin{array}{cccccc} department& salaries&OASDI&HI&SUTA&FUTA\\ office&22,760&1,411.12&341.4&280&42\\ sales&65,840&4,082.08&987.6&280&42\\\end{array}\right]$

We apply for each department the tax rate. Notice SUTA and FUTA have a ceilling of 7,000 so we do not apply the rate to the whole amoung but, for the 7,000 ceiling.